
Mrs Ford, who has a 37% marginal tax rate, is the sole shareholder and CEO of Fast Inc. She also holds a $1 million interest-bearing note issued by Fast. The corporation's current-year financial records show the following:
Sales revenue $ 1,879,000
Mrs Ford's salary (160,000 )
Other operating expenses (414,000 )
Interest paid on Mrs Ford's note (60,000 )
Dividend distributed to Mrs Ford's (100,000 )
Compute Fast's taxable income.
A) $1,145,000
B) $1,245,000
C) $1,305,000
D) $1,465,000
Correct Answer:
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